China faces up to Hollywood competition

There was much hand-wringing at last week’s Shanghai International Film Festival (SIFF) about how local films are suffering following the widening of China’s import quotas for foreign films.

According to speakers at SIFForum, China’s film market grew to around $1.14bn (RMB7.2bn) in the first five months of 2012 - but the 81 Chinese films released in this period had a market share of around 30%, while 34 foreign films, including Titanic 3D, Battleship and The Avengers, took more than 65% of box office revenues. Chinese films tend to cluster around the second half of the year, but still usually achieve a market share of at least 40% in the first half.

Several Chinese films have been released since the quota was widened in February - including Wang Xiaoshuai’s 11 Flowers, which played at Toronto, Guan Hu’s Design Of Death, Zhang Yang’s Full Circle, Yang Shupeng’s An Inaccurate Memoir and Ning Hao’s Guns And Roses [pictured]. But only Ning’s heist caper was considered an unqualified success.

None of these films were big-budget productions, but they had planned to take advantage of what is usually a less competitive period between Chinese New Year and the onslaught of Hollywood blockbusters in the summer. With the quota for foreign films expanded from 20 to 34 titles a year, it appears that quiet periods are a thing of the past.

Chinese filmmakers at SIFF were not asking for the quota to be reinforced, but complained that local restrictions such as censorship places them at a disadvantage. “We can’t compete with Hollywood on a level playing field,” said City Of Life And Death director Lu Chuan. “Hollywood can shoot anything - they can film aliens attacking Los Angeles, but we can’t do the same here.” Lu also hinted that his upcoming period drama The Last Supper has had its summer release delayed due to censorship issues.

Piracy is also taking a big bite out of local films, but perhaps the biggest problem identified by SIFF panellists is China’s exhibition system. Due to anunder-developed and piracy-ravaged ancillary sector, Chinese films rely on theatrical release for more than 90% of their revenues. However, cinemas give priority to Hollywood films as they’re considered a safe bet.

“We have to think about the audience - we know they like American films, which are not all that innovative, but they maintain a steady quality,” said Chinese filmmaker Wuershan, whose Painted Skin 2 opens this weekend.

On the sidelines of the forum, local producers talked about how cinemas tend to relegate Chinese films to smaller screening rooms and yank them off screens if they don’t produce big numbers in the first few days. With no breathing space, it’s almost impossible for a film to flourish on word-of-mouth. Local sleeper hits such as last year’s Love Is Not Blind may have generated huge publicity, but they’re few and far between.

Bona Film Group CEO Yu Dong, himself both a producer and cinema owner, warned that a situation could develop where “local audiences will think that the big screen is for special effects, which means Hollywood, and for domestic films will settle for new media or DVD.” Big-budget Chinese films, such as Zhang Yimou’s Flowers Of War or Jiang Wen’s Let The Bullets Fly, can stand on their own two feet, routinely grossing $40-90m (RMB300-700m) around major holiday periods, but a healthy industry needs production across all budget ranges.

So what’s the answer? Amidst the soul-searching, plenty of solutions were floated by both filmmakers and industry executives. One suggestion was the introduction of a light screen quota for cinemas to ensure they dedicate space to local films. Lou Ye, whose Mystery recently played at Cannes, pointed to the example of Korea which employed a screen quota and ratings system to support its local film industry in the early days of its development. “But these issues are still outstanding in China - why weren’t they resolved before the market opened?” he asked.

Enforcement of copyright protection and development of ancillary markets were also discussed. China appears to have leap-frogged the DVD age, but new media owners speaking on a panel about online distribution said they still haven’t found effective revenue models for distributing films. “The main source of income for online video is advertising and it’s much easier to place ads in entertainment programming rather than mini-series or films,” said Sohu vice president Liu Chun.

Another area that needs development is the domestic special effects industry. Young Chinese audiences, like young audiences anywhere in the world, enjoy spectacle - action, explosions, fantastic creatures and anything in 3D - and they expect this to be delivered to the same technical standards as Hollywood. Some Chinese movies such as Tsui Hark’s 3D Flying Swords Of Dragon Gate have come close, but overall quality is patchy, which is why cinemas plump for Hollywood’stried-and-tested brand.

Co-production was also discussed as a method of raising the technical and universal story-telling standards of the local film industry, but opinions were mixedabout its effectiveness.

In the question and answer session following a co-production panel, local filmmakers seemed doubtful about whether it’s possible to craft truly cross-cultural stories that work with both Chinese and international audiences, as opposed to US films that have been tweaked to fit China’s co-production rules. “There is this model where you take a Hollywood movie and attach [Chinese elements] but the story is not organic to China. We’re absolutely not interested in doing that as it’s not honest,” said Ellen Elisoph, head of Village Roadshow’s China production arm, which is producing a slate of local films including Keanu Reeves’ Chinese-language Man Of Tai Chi.

With a slew of US-China collaborations in the works, including Stan Lee’s Chinese superhero project The Annihilator, which has secured funding from Chinese state-run fund National Film Capital (NFC), it’s only a matter of time before the co-production theory is put to the test. “Co-productions are useful but they can’t solve all our problems,” said Gao Jun, deputy general manager of the New Film Association cinema circuit.

In conclusion, all the issues that were being discussed are the usual problemsfaced by developing film industries - with all the hype about China’s financial muscle, buying up US cinema circuits and investing in international productions such as Cloud Atlas, it’s easy to forget that its domestic industry is still incredibly young and lacks basic infrastructure.

However a healthy domestic Chinese film industry is in everyone’s interest, as the Chinese authorities will not allow further access to the market unless the local industry is strong. For the industry to develop, it most likely needs support both from within - from the Chinese government in the form of light regulatory, financial and infrastructure-building assistance - and from outside China through co-operation with international producers, distributors and facilities companies.

“It’s all about timing and being ready - the expanded quota is actually good news for China’s big studios,” observed Le Vision Pictures CEO Zhang Zhao. “Until now, the Chinese film market has been protected by the government, but you can’t grow up without some growing pains.”

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